How does data analytics relate to Big Data? Why should accountants incorporate data analytics into their work?.
Why should accountants incorporate data analytics into their work?
Today’s businesses use data to refine their business activities. Companies now have the ability to track market trends so their products or services can be attuned to remain relevant. Data is now the cornerstone of business intelligence gathering. The ability to retrieve large amounts of raw data in of itself does not yield useful information. To be informative it needs to be refined, and categorized. From an Accounting perspective it has promoted a means for accurately assessing and reporting the overall performance of the business. Any issues that could prove to be problematic can be identified and decision makers can create a strategy for resolution. In essence, data analytics aids in fostering a better operational process from A to Z.
With organizations using Big Data beyond understanding and forecasting consumer behavior, large amounts of data is generated by the internal actions the business must undertake to remain operational. Internal day-to-day activities include everything from Inventory and Sales to Payables and Collections. Financial Reporting is made more efficient as companies utilize technology capable of capturing and storing every business transaction. Accountants need to be able to understand how to analyze and retrieve useful information from these systems. Big data can prove overwhelming if there is an inability to navigate and interpret the data provided (Richardson, Chang, & Smith, 2018, p. 217).
Auditors now use the data available, by way of Enterprise Planning systems like SAP to develop and audit trail. Overall insight into a business and its protocols is gained with increased understanding of the data source. With accounting information generated by every action captured within these systems, it is necessary develop an understanding of the system itself. The accounting profession as a whole acknowledges the importance of adapting. Clients are prone to require it, as business assessments are increasingly reliant on data analysis. Incorporation of data analytics remains a challenge for Auditors and accountants. The information must be deciphered although each company may have their own means for presenting the data as support for financial reporting review. While the challenge remains to find uniformity when it comes to the submission of information to both internal and external accountants, the objective still remains to be mitigate risk while expanding opportunity (Tang, 2017).